China Construction Bank Accused of Misselling Fund, Daily Says

Dec. 26 (Bloomberg) -- Seven investors in a wealth
management product sold by China Construction Bank Corp., the
nation’s second-biggest lender, complained to regulators after
suffering losses, the National Business Daily reported today.

The savers, from Baicheng city in northeastern Jilin
province, filed a complaint with the China Banking Regulatory
Commission and the China Securities Regulatory Commission, the
newspaper reported, citing one of the petitioners. The investors
said they were misled by Construction Bank’s local staff into
buying a fund known as Northeast Securities No.3, which required
a minimum investment of 100,000 yuan, the newspaper said.

Wealth management products, which typically offer higher
yields than deposits, make up about 10 percent of China’s
banking system deposits, Barclays Plc wrote in a Dec. 10
research note.

The quality and transparency of the products, China’s
biggest shadow banking field, is “worrisome,” Bank of China
Ltd.’s chairman Xiao Gang wrote in an opinion article for the
state-owned China Daily newspaper in October.

Two phone calls to the press office of the CBRC went
unanswered. The CSRC didn’t immediate respond to a phone call
and faxed questions seeking comment. A person reached by phone
at Construction Bank’s investor services department declined to
comment on the report. A person at Northeast Securities, the
manager of the product, declined to provide the contact
information of anyone who could comment on the report.